Module 4 of 6 in Technical analysis
Chart patterns and candlestick formations
Candlestick formations, reversal and continuation patterns, and volume confirmation, treated as observations to test rather than predictions.
4 lessons in this module. Progress is saved in your browser as you go.
Chart patterns are names for shapes that traders have noticed repeatedly. This module describes the common ones precisely, including how to define them so that someone else would draw the same pattern, and treats every pattern as a hypothesis that needs testing on many examples, not as a forecast.
By the end of this module you should be able to
- Identify common candlestick formations and explain why their predictive value is weak on its own.
- Describe reversal and continuation patterns using objective rules.
- Explain why pattern success rates need large, unbiased samples to measure.
Lessons in order
Module test
10 questions, chosen at random from a bank of 30 questions and balanced across this module's learning goals and difficulty levels. Every question comes with an explanation. You need 80% to pass, and you can retake it as often as you like with a fresh set of questions.
This module builds on
- Candlesticks and chart timeframes: Formations are combinations of the candle shapes explained there.
- Support and resistance: Formations are usually read in the context of support and resistance zones.
- Trendlines and channels: The neckline of a head and shoulders pattern is drawn like a trendline.
- Breakouts, pullbacks and retests: Every continuation pattern ends in a breakout or breakdown, explained there.
- On-balance volume: That lesson shows how volume-based indicators summarise volume and where they mislead.